Not even punny: Airline profits soar, employees left holding the bag

May 22, 2012 | Economic Opportunity Institute

seatac workers

Photo: Port of Seattle

SeaTac Airport, the 17th largest airport in the U.S., is a major carrier of Washington’s economy. From 2007-2010, passenger travel increased  in spite of the recession – and the airport’s net operating income took off, exceeding $57 million. Alaska Airlines, the largest airline operating at SeaTac, enjoyed record profits in 2010 and 2011, and responded by happily delivering record bonuses to its employees. But it wasn’t blue skies and smooth sailing for everyone at SeaTac.

SeaTac Airport– operated by the Port of Seattle – is a public agency that employs tens of thousands of people. Many of these workers have good jobs that pay family wages and provide benefits, but 4,000 of them do not. These 4,000 workers – often skycaps, baggage handlers, wheelchair attendants, cabin cleaners and jet fuel technicians – are employed by dozens of faceless contracting companies, earn surprisingly low wages and lack affordable healthcare.

Despite working for a public agency in nearly every respect, these contract workers earn 27-41% less than those directly employed by airlines with comparable jobs, and have fewer opportunities for advancement. The average wage for these contracted workers is $9.70/hour or $20,176/year for a full-employee – just $1,600 over the federal poverty level for a family of 3, and below a living wage for a single adult in Washington state.

airline contractor employees at bottom of industry

With low wages and high premiums, healthcare is also out of reach for many of these contract employees. From 2006-2010 an average of 1,100 airline-related workers each year enrolled in Washington’s subsidized healthcare plan at a cost of $6.3 million – a large indirect public subsidy to these low-wage employers.

Despite $4+ billion in revenues, Alaska Air – which is responsible for 55% of all landing and takeoffs at SeaTac – has left many SeaTac workers critical to their operation holding the bag. A recent report from Puget Sound Sage states: “A key component of the [Alaska Air’s] strategy to increase pro?ts has been to contract out increasing portions of its workforce and operations. In the last decade, the value of the work Alaska contracted out has grown from $82 million to $185.1 million.”

Contracting out work might please shareholders, but it occurs at the expense of highly productive workers, and often leads to wage stagnation.

ramp productivity and stock value at alaska increase, but ramp wages stagnate

Of course, it doesn’t have to be this way. Alaska Airlines just completed a $238 million terminal remodel  at Los Angeles International Airport (LAX) where contract employees are paid a minimum of $15/hour.

SeaTac doesn’t have to choose between airline profits and good jobs. As is the case at LAX, the cost of paying workers a decent wage will likely be offset by reduced turnover and increased employee loyalty.

SeaTac helps to keep our state economy strong and bring in economic activity, a task made possible by the hardworking employees who keep the airport operating well. The Port of Seattle ought to ensure all employees working there have good jobs, with affordable benefits and living wages.

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Posted in EOI

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